Why iPads Cannibalizing Macs Will Benefit Apple's Bottom Line

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Piper Jaffray analysts offer data on why Apple says it doesn t worry about iPad sales eating into those of Macs: By 2015, a 1 percent growth of tablets will yield $83 million more than a 1 percent growth in Macs.

Over the long term, iPads cannibalizing Macs will significantly benefit Apple's bottom line, according to a May 30 research note from Piper Jaffray analysts. Over the next 10 years, the analysts expect sales of tablets, to surpass those of PCs, with the Apple iPad continuing to dominate.

"We believe Apple maintaining its majority (60 percent plus) market share in the ultimately larger tablet market is more important than meaningfully increasing single-digit market share in the PC space," despite the price of a Mac computer being two and a half times higher than that of an iPad, wrote Piper Jaffray analysts Gene Munster and Douglas J. Clinton.

This year, Piper Jaffray expects total tablet sales to reach 99 million units, with the Apple iPad accounting for 66 million of those. The PC market is expected to ship 371 million units. In 2015, Munster and Clinton predict total tablet sales to reach 301 million units -- 176 million of them iPads. The PC market, meanwhile, they're forecasting to reach 484 million units.

"We believe tablets could overtake sales of notebooks by 2015 and total PCs well before 2020," the analysts state in their report.

Currently, if you look the incremental tablet units sold year-on-year in 2012 and years beyond, tablet units growth will far outpace incremental PC units. At 1 percent share of the incremental PC units in 2015, Apple would generate $311 million in incremental revenue, but a 1 percent share of incremental tablet sales in 2015 would generate $394 million in revenue.

Put another way, a 1 percent growth in tablets yields approximately $83 million more than a 1 percent growth in PCs.

Combined iPad and Mac sales are forecast to reach $62 billion in 2012. "Assuming aggressive cannibalization of the Mac," states the report, combined sales of the two will nearly double to $119 billion in 2015.

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